Antitrust Complaint Against Honeywell

PHOENIX (CN) – Honeywell International conspired to use its market power to destroy competition for auxiliary power unit repairs by forcing consumers to go to Honeywell or a Honeywell-affiliated provider, a competitor says in a federal antitrust complaint. Honeywell reported more than $36 billion in net sales in 2008.




     Aerotec International, an auxiliary power unit (APU) repair service, claims that “Honeywell wields monopoly control and power over the manufacture and distribution of replacement parts” for Honeywell units, so Aerotec is forced to rely on “its largest and fiercest competitor” to supply parts needed for most APU repairs.
     An APU is a small turbine engine that powers critical auxiliary functions on most jets.
     Aerotec claims that Honeywell, a global provider of aircraft engines, power units and other aviation equipment, denies it access to “parts, repair data, technical information and required tooling.”
     Honeywell routinely “solicits and secures” from new customers – before other repair providers are aware of the transaction – a multiyear, exclusive APU service agreement when it buys an aircraft on which a Honeywell unit will be installed, Aerotec claims. The agreement prohibits the purchaser from using non-Honeywell replacement parts or getting repairs from anyone other than Honeywell.
     Aerotec says Honeywell induces agreement with promises of reduced prices for parts and repairs, and priority delivery on parts.
     According to the complaint, in return for access to Honeywell replacement parts, repair providers pay Honeywell royalties and agree to buy APU parts only from Honeywell. The contracts preserve Honeywell’s monopoly, and harm Aerotec, which describes itself as a “formidable competitor” that provides higher quality and lower cost repairs than Honeywell and its providers.
     Aerotec says it applied to be a Honeywell-affiliated repair provider in 2007 after Honeywell forced it to pay cash in advance on all its purchases, but it rejected Aerotec’s request.
     Through the application process, Honeywell gained access to Aerotec’s financial information and charged it “prices less than or equal to airline catalog list prices for APU replacement parts” to cripple the service provider, according to the complaint.
     Aerotec claims that Honeywell has repeatedly told it that it has inventory available, but after Aerotec places and prepays for an order, Honeywell “frequently tells Aerotec that the previously ‘available’ parts are now out of stock, unavailable to Aerotec because the parts are on a Honeywell-dictated ‘critical allocation,’ or subject to unreasonably and unjustifiably long delivery times. Aerotec routinely receives delivery, if at all, long after initial delivery schedules and well beyond the turnaround time reasonably expected by Aerotec’s airline customers, who depend upon timely APU repairs to keep their aircraft operational.”
     Honeywell also illegally restricted access to technical data from its repair manuals, or removed the data from them, Aerotec claims, causing airline customers to avoid nonoriginal equipment manufacturers of APUs, like Aerotec.
     Aerotec seeks treble damages for antitrust violations. It is represented by Ronald Cohen with Cohen, Kennedy, Dowd and Quigley.

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